both parents claimed child on taxes

[Reddman]

What is the name of your state? TN

My brother and his girlfriend had a baby, and my brother was the primary supporter in the family while they lived together for three years, then split up. The child's mother initially claimed the baby on her taxes and received Earned Income Credit. However, she told my brother that the IRS had a lien on her taxes due to an old debt to the government so she supposedly didn't receive the check. So last year, my brother claimed the baby on his taxes. He was the main supporter while they lived together in 2006, so according to the IRS he qualified to claim the child as his dependent and receive EIC on the child's behalf. The child's mother was in agreement.

Then they split up. My brother has paid child support, and was planning to claim the child on his taxes again this year. The mother said no, she plans to claim the child and collect EIC for 2007.

We've since learned that the IRS didn't have a lien on her taxes and she received the 2005 refund and simply hid and spent it. We also just found out that she also claimed and received EIC on her 2006 taxes last year, and lied to my brother about it.

Both of them claimed and received EIC credit for 2006. It slipped through the IRS at the time, but it will eventually catch the attention of someone with the IRS.

Is there a chance that either one of them could be charged with tax fraud? Could they simply contact the IRS and offer to repay, or get a lawyer first before approaching the issue?

 

[tranquility]

Have the one who should not have declared the dependent file an amended return. There will be a need to pay back the money, with interest. Penalties may apply, but the IRS often allows them to slide in such situations. Intent is key to tax fraud and filing before the government comes calling almost always prevents any criminal action.

If you wait for the inevitable letters, penalties will be sure to apply and the IRS will look at the facts to see if they can prove a criminal intent.

 

[LdiJ]

For 2006, whether or not your brother was the valid person to claim the child depends a great deal on when they broke up. When parents are not living together, whoever provided the most support has nothing to do with who gets the exemption. It has to do with whom the child primarily lives.

For 2007, its definitely mom who has the valid claim under federal tax law, NOT your brother.